Q1 2014 Venture Fundraising Update

// Wiley Becker - Guest Contributor

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April 30, 2014
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Capital Raised Jumps Significantly in Q1 2014
Increase Driven Primarily by Five Funds Raising $5.3B
Number of New Funds Also Increases, but Only Accounts for 8% of Total Capital Raised

Q1 2014 Venture Fundraising

Thomson Reuters and the National Venture Capital Association ; 2014 Rolling Four Quarters through 03/31/14

In Q1 2014, 58 US venture capital funds raised $8.9B according to Thomson Reuters and the NVCA. This represented the strongest fundraising quarter by dollars raised since Q4 2007. However, the five largest funds raised this quarter accounted for 60% of total dollars raised, demonstrating further polarization among large, longer-tenured firms and smaller, new firms. PitchBook similarly reported 49 funds raising $8.8B in Q1 2014, while four funds each raised over $1B (PitchBook Data, 2014).

Further, the number of new funds raised in Q1 2014 reached 25, the largest number of new funds since Q4 2000. However, the amount of capital raised by new funds represented only 8% of total capital raised. The largest new fund raised in Q1 2014 was WiL Fund I, LP at $243MM, while the largest follow-on fund raised was TCV VIII, LP at $1.38B. Founders Fund V, LP also raised over $1B in Q1 2014.

On a rolling four quarters basis, the number of funds raised is up 18% as of Q1 2014, while the amount of capital raised is up significantly by 27%. This is primarily due to $5.3B being raised by just five funds this quarter. Consequently, average fund size is also up to $95MM on a rolling four quarters basis, a 7% increase from $89MM in 2013. PitchBook also reported that 81% of funds closed in Q1 2014 reached their fundraising target, which was a significant improvement from 71% in 2013.

With the exception of some established firms, fundraising for most venture capital firms has been difficult in recent quarters due to a shaky exit market,” said Bobby Franklin, President & CEO of the NVCA. “Recently, however, we’ve been experiencing an uptick in IPO activity as well as momentum in the M&A market, enabling venture capital firms to distribute proceeds to their investors and begin the process of raising money for the next crop of American businesses. While conditions are certainly better, the fundraising environment for many of our members continues to be very difficult.”

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